Montgomery County Commissioners Vote to Refinance 10-Year-Old Debt

Montgomery County Commissioners approved an ordinance Wednesday to refinance 2001 general obligation bonds through a refunding program.

Because the county received an AAA bond rating from Moody’s Investors Service, the county will refinance its existing debt through a bond issue with a 1.997 percent interest rate, said Public Financial Management Managing Director L. Gordon Walker.

In the same ordinance, the county will also terminate a swap agreement made in 2001 in conjunction with the 2001 bonds. The termination will cost the county $7.9 million, said Walker, who is also the county’s financing consultant.

Walker said he believes termination is best for the county’s long-term interest because otherwise the county would have to refund bonds with a variable rate. He said when the decisions to engage in the swap agreement were made, the county had obviously not foreseen Wall Street crashing in 2008, which caused rates to drop.

Originally, the county had received $2.2 million upfront from the agreement, and it “seemed like a positive move at the time,” Walker said.

“Had we known things we know now then, we wouldn’t have done it,” Walker said.

Commissioner Joe Hoeffel said it’s easy to be critical in hindsight, “but, boy, we really made the wrong decision.” He also said there is talk of banning swap agreements as many municipalities are facing the same problem now as the county.

Chairman James Matthews said it is important to note that the county’s finances are strong right now, and the county was recently cited as the 16th-wealthiest in the United States, according to a national study.

“Our county is certainly not overburdened with debt,” Matthews said.

The county health department will enter into a contract with VaxCare for one year to conduct a new immunization program at three senior citizen centers in the county. The department will continue with its usual community immunization clinics along with the new program, said Ruth Cole, director of clinical services.

A contract with Loryx Systems, Inc. was approved for the county’s adult probation office. Chief Adult Probation and Parole Officer Michael Gordon said company will provide a case management system at no cost to the county. Minimal offenders will pay a $6 fee to the company, which is only a dollar more than they pay now, and they can engage in their own supervision to check either online or over the phone when they need to come into the office for tests, Gordon said. Philadelphia and Bucks counties both use the services of Loryx Systems, Inc. with success, he said.

The county also approved the Housing and Community Development’s 2011 Annual Action Plan, along with grants for the Public Safety Department’s firefighting foam concentrate, the county library’s overhead rolling door, Peter Wentz Farmstead upgrades and more.